Even Labour hate their tax on the family home

Hitting elderly people on modest incomes is not the answer

Of all the harebrained policies suggested by Ed Miliband’s Labour Party the most punitive so far is their tax on the family home.

Labour are desperate to find as many ways as possible to raise taxes. So Miliband and Balls have decided that a tax on homes valued above a certain level is a great idea. Even if it would mean that pensioners and retired couples who had seen the value of their single largest asset go up were forced to move.

So it was an interesting development to see reports this morning that several of Labour’s big-guns have broken ranks to speak out against this mad idea. Tessa Jowell, one of the saner and wiser voices in Labour, is quoted as saying:

"people who bought homes maybe 20 or 30 years ago for a fraction of what they are worth now. They are people maybe becoming elderly who are asset-rich and income-poor... these people they would have to move out of their family homes."

Even Diane Abbott, not exactly a voice of the right, suggested that such a plan was a ‘tax on London’. In fact for many Londeners this would be another tax thi on the squezzed middle.

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Such criticism may have something to do with Labour’s top-flight MPs looking to get off Miliband’s sinking ship and on to the London Mayoral campaign trail, but it is still a, notwithstanding, a devastating attack on Labour’s latest flagship tax policy.

Labour have no economic plan. All they want is to continue Labour’s legacy of spending – Gordon Brown’s debt fuelled years would be replaced with new borrowing under Ed Balls.

But voters have finally twigged that you can’t simply spend money you don’t have. Labour tested that theory to destruction and nearly bankrupted Britain.

Labour haven’t learnt that lesson - but they do occasionally like to make token gestures.

The bank levy is a prime example. They were so excited by their ‘bankers’ bonus tax’ idea that they started announcing what they would spend the revenue on immediately, even when their numbers were shown not to add up.

It’s like a gambler who thought he was in for some luck and buys everyone in the pub a round before collecting his winnings. It all comes crashing down when, half-drunk, he discovers he got the odd wrong and hasn’t won as much as he thought.

More money for childcare, plucking a job out of thin air for every young person, more capital spending, reversing child benefit changes, building houses, reversing Tax Credit savings, turning empty shops into community centres – you name it, Labour have pledged to spend their new bank tax on it.

And it’s Ed Balls, whose reputation for financial discipline was handed down from Gordon Brown, who signed this off. Why Labour think they have any right to be trusted on the economy is beyond me.

Labour’s tax on the family home would become their new bank tax. A token gesture towards paying their way.

As with the bank tax, Labour’s sums simply don’t add up. The only way Labour would be able to pay for all their spending commitments through a home tax is if the threshold was dropped significantly lower to hit more and more people in middle Britain. As Tessa Jowell admits, if Labour are being honest, it is a tax on the family home.

It is right to make sure that the rich pay their fair share – and that is what we are doing. The richest in society are in fact paying a bigger share of tax than under Labour, and we have saved the average working person nearly £600 a year by reducing taxes for people on low incomes.

But hitting elderly people on modest incomes – raising the prospect of pensioners being taxed out of their homes – is not the answer. Even some of Labour’s mayoral hopefuls are waking up to that.